Linux Inventor Says He Doesn’t Believe in Crypto
Linux Inventor Says He Doesn’t Believe in Crypto
Linus Torvalds has said that cryptocurrencies are simply "a great vehicle for scams"
- Linus Torvalds, creator of Linux, does not believe in cryptocurrencies, calling them a vehicle for scams and a Ponzi scheme.
- Torvalds was once rumored to be Bitcoin creator Satoshi Nakamoto, but he clarified it was a joke and denied owning a Bitcoin fortune.
- Torvalds also dismissed the idea of technological singularity as a bedtime story for children, saying continuous exponential growth does not make sense.
It’s interesting to see Torvalds emerge as a kind of based tech hero. I’m thinking here also of his rant not long ago on social.kernel.org (a kernel devs microblog instance) that was essentially a pretty good anti-anti-leftism tirade in true Torvalds fashion.
EDIT:
Torvalds's anti-anti-left post (I was curious to read it again):
I think you might want to make sure you don’t follow me.
Because your “woke communist propaganda” comment makes me think you’re a moron of the first order.
I strongly suspect I am one of those “woke communists” you worry about. But you probably couldn’t actually explain what either of those words actually mean, could you?
I’m a card-carrying atheist, I think a woman’s right to choose is very important, I think that “well regulated militia” means that guns should be carefully licensed and not just randomly given to any moron with a pulse, and I couldn’t care less if you decided to dress up in the “wrong” clothes or decided you’d rather live your life without feeling tied to whatever plumbing you were born with.
And dammit, if that all makes me “woke”, then I think anybody who uses that word as a pejorative is a f*cking disgrace to the human race. So please just unfollow me right now.
Smart man!
The focus of what Torvalds said is the concept of tech singularity. TL;DR "nice fiction, it doesn't make sense in a reality of finite resources". I'll move past that since most of the discussion is around cryptocurrencies.
Now, copypasting what he says about cryptocurrencies:
For the record, I also don't believe in crypto currencies (except as a great vehicle for scams - they have certainly worked very well for the "spread the word to find the next sucker holding the bag" model of Ponzi schemes). Nor do I believe in Santa Claus, the tooth fairy, or the Easter bunny.
For those who understood this excerpt as "Tarvalds thinks that cryptocurrencies dant ezizt lol lmao": do everyone a favour and go back to Reddit with your blatant lack of reading comprehension. When he says that he doesn't believe in them, he's saying that he does not see them as a viable alternative to traditional currency. (He does not say why, at least not in that message.)
And for those eager to babble "ackshyually ponzi schemes work different lol lmao": you're bloody missing the point. He's highlighting that a large part of the value associated with cryptocurrencies is speculation, not its actual usage. Even cryptocurrency enthusiasts acknowledge this.
I apologise to the others - who don't fit either category of trashy people I mentioned above - for the tone. Read the comments in this very thread and you'll likely notice why of the tone.
The vast majority of the crypto world failed to understand one key concept, money is not the value for which goods/services are exchanged, it is the value by which they are exchanged. People do not have a use or value for money beyond what it can be exchanged for, if no one is willing to exchange for it, it has no value.
Crypto only had value as a currency if people would accept it for goods or services, and the only thing people ever accepted it as payment for, in any meaningful capacity, were illegal goods and services. The value beyond that was purely based on a speculative ideological assumption that people would abandon the traditional banking system for a new system that they couldn’t buy anything with.
Oh yeah? Then explain this!! /s
I actually considered a non-governmental, community regulated currency as a pretty good idea.
Problem is, crypto is too ecologically expensive and wasteful to fit the bill.
While there were some interesting ones, that actually used the processing power for something useful, most are not. So for now, I'll just go with governmental currencies.
I think there was a potential future where cryptocurrency could've actually been useful, but it was ruined by scammers, rug pullers, and of course, speculators.
I'll still hold a little bit of Monero, since it holds the most potential for being a real currency in my opinion. But otherwise, I fully agree with the sentiment.
Cryptocurrency is a useful technology that has some real-world use cases - for example, living in Russia, I use it to circumvent sanctions to donate to some of the crypto-friendly creators, pay for a VPS abroad, and I keep calm knowing I can transfer money to my relatives abroad.
However, it is obviously not the answer to how we should build the financial system. The problem is not environment, actually - many Proof-of-Stake blockchains allow to transfer crypto with minimal environmental impact - but the poor on-chain regulation (including taxation, too) and potentially excessive infrastructure, as well as little protections against malicious and fraudulent actors.
Besides, inability to control emission, while helping maintain the value of the currency over the long run, also means that many interventions that can save economy in a crisis are simply not available. And a deflationary nature is known to cause bubbles.
My hot take is this:
Crypto currency, when in its infancy, had a halfway decent concept.... now? It's a shitshow.
Crypto bros tend to argue about the main currencies, Bitcoin, etherium, etc. Meanwhile, there's about 1000 currencies that aren't talked about for every currency with any weight behind it.
The main problem with CC's is that it's all hype and confidence based. There's nothing tangible attached to it. I often equate it, for non-cryptocurrency people, to stocks trading. Often, stock is trading above what the actual value of the stock is. Most of the time in IPOs the price of the stock immediately jumps after the stock is released, then trends along some impression of how the company is doing. If there's a loss in confidence in the company the value of the stock drops, etc. It's pretty simple supply and demand beyond that. If investors have high confidence in the company to profit, demand for their stock will increase, and since supply is pretty much fixed (aside from shenanigans like stock splits and whatnot), price goes up. Same goes for the inverse, low confidence leads to low demand, price goes down.
It's similar with so-called crypto. Confidence goes up but supply is fairly stagnant, so the price goes up. Same with the inverse.
The primary difference between the two as investments, is that stocks get repaid (depending on a few factors) if the company goes under. The stock represents a monetary value for assets owned by the company, both liquid and physical assets. Crypto, however, has no such backing. If Bitcoin goes away for some reason, all you're left with is essentially digital trash.
This is mainly true for all of the talked about cryptocurrencies. The majority of currencies are not really following the same trends. After the initial golden era of CC's, it became a breeding ground for pump and dump schemes. Since it's entirely unregulated, borderline impossible to regulate, and AFAIK, no such regulation exists to govern it, there's no law against pump and dump schemes in the CC world. So it became a huge problem. We see this a lot with NFTs. Touching on NFTs for a second: if you own an NFT, all you actually own is a receipt that is an attestation or receipt that you paid for whatever the NFT is. That's it. The content behind the NFT, whether it's artwork or whatever, isn't locked. It's actually the opposite of locked, it's publically available on the blockchain, by design. The only thing you "own" is a tag in the blockchain that says you paid for it.
Pump and dump, for those unaware, is where you artificially inflate the value of something making it seem like a really good deal so everyone buys it, raising demand and prices, then the people who generated the hype dump their investment, cashing out when the value is high, and making off with the money while the value of the investment tanks.
This is very very frequently the case with NFTs. Since it's unregulated and entirely confidence based, the creators of NFTs will say whatever they have to (aka lie), to increase the confidence in the NFT, then sell it, and let the value freefall afterwards. They've even gone to the point of buying their own NFTs with dummy accounts for top dollar to have records on the blockchain that people can look up, which say it was sold for x amount in whatever cryptocurrency, to inspire others to think they're getting a bargain when they get it for some fraction of that initial transaction. The perpetrators then sell and disappear.
Several other crypto scams like this have also happened, mostly with NFTs but also with lesser known currencies. One that I heard of, required some token to exist to perform any transactions on the blockchain. When the perpetrators were done, they deleted the token, effectively locking the currency to never be traded again. Therefore those with the now digital trash of that crypto/NFC, couldn't sell to anyone else and they were stuck with the digital garbage data that used to represent their investment.
"Big" currencies, especially older currencies, are fairly stable in terms of confidence, but they're still volatile, and backed by nothing more than confidence. Any "new" CCs are a gamble to see whether they're legit at all, or just a pump and dump. The number of currencies that start high, then drop to nil and never recover, is significant.
Here's a controversial one, Elon Musk, for all of his flaws, isn't an idiot. He pump and dumped Dogecoin, by tweeting about it to bolster it, then divesting when it surged from his influence. I think this was pretty obvious, but I think a lot of people missed it. IIRC, he did it twice. I'm speculating, since I don't know which blockchain wallet is his, so I can't verify, but, he likely picked up a crapton of Doge then did his tweet, dumped when it went high, waited for it to drop again, picked up a crapload more, tweeted again, and finally dumped at another high to earn even more. Since then, doge has not been doing superb. He inspired volatility in the currency and profited from the crypto bros getting excited about it.
The evidence is there and when you look past the confidence game, and look at the numbers, it tells a story that most people don't want to see.
Then why does the kernel have a crypto API?
Checkmate, Satoshi Torvalds!
It's as if this headline were written to stir discussion on lemmy.
Thank goodness. Such a useless technology.
Scratch that... it's not useless, because it's great for scams and fraud. It's actively harmful.
Lets see, cryptocurrencies involve tech bros, fin bros and lots of money. I am not surprised it is on its way to become the most disgusting money making scheme in the world.
Cryptos can be a useful technology in certain targeted fields but they are not the solution to capitalism, it is much more important to focus on social issues and mutual aid.
How are you asking Linus about crypto and not about the blockchain.
Based
If Torvalds was Satoshi he would have done a lot more with those untouched bitcoin than let them sit around for more than a decade
The value of a crypto token is ostensibly related to the value of the apps which the blockchain supports. It's meant to be both a form of compensation for participating in the network, and as currency for purchasing services from blockchain apps. That's how it derives intrinsic value. So if there is social media which runs on a blockchain, then the hosts within that blockchain get tokens for participating, and eg, advertisements or subscriptions are purchased in tokens. This means those who manage those participant nodes can sell their tokens to those who want to buy blockchain services. As the cumulative value of these services grows, an entire crypto economy is established, and it becomes effectively another form of fiat which has a real exchange rate backed by some real economic activity.
This is how it's supposed to work. The problem is that we just don't have any compelling apps, and the initial speculation has all but ensured that this cannot happen organically because the market cap is already just so much bigger than any realistic medium term outlook for intrinsic value. Bitcoin's blockchain would have to support some form application value which is bigger than the biggest companies in the world, and right now it basically has zero useful applications.
I don't believe in crypto either because it's current value is solely derived on how much you can exchange it for real money. Outside of a few edge cases, nobody buys anything with crypto outside of the black market.
I'm sure crypto is a great solution to some finance problems related to centralized banking that I'm too lazy or dumb to care about, but I look at the energy consumption to calculate these massive chains for little tangible benefit, and the scammers and hypemen who are profiting off of other people's hopes and desires to get rich quick on the next big boom, and I can't help but feel like it's an actively harmful element of society. At the very least, whatever regulations are currently in place that are attempting to reign in crypto are insufficient at reducing harm.
Read the actual forum directly if you want to extend your daily fix of other tech people's interesting opinions: https://www.realworldtech.com/forum/?threadid=217627&curpostid=217694
Much more difficult to fake.
I mean yeah… Linus may not like it but people will still build on top of Ethereum & others
You can just use crypto for its intended purpose and not give a shit about the whole culture around it. I frequently use it to buy gift cards not available in my country, a VPN, and pay securely without giving away all my data.
The real issue is people coming and bastardizing the concept by trying to get rich, and treating it as some kind of gambling machine.
He didn't say "i don't believe in crypto because it's a scam" he said "I don't believe in crypto, except on its use as a scam" so it'd be great to hear why.
Good
So... he's into CBDCs, I assume? Yeah, no thanks!
Neither do I
me too
True.
I've literally only made millions off of crypto. Of course this is the Internet and I don't need to verify me making shit up, but I will continue to say so because otherwise my feelings will get hurt. If you uplemmy this comment I will send you one trillion Bitcoin, real!
There are two types of people: those who had their money stolen by the government and those that did not.
UPD: Screw gamblers and shills, though, with that I can at least agree.
comrade Torvalds?
Equivocating cryptocurrency, block chain tech, and bitcoin is disingenuous to say none of that exists like fairies or Santa Claus. It exists just as much as PGP or AES or the deficit does. It's dumb to think any of that is going to launch you to extreme wealth or solve everyone's problems, but it is a good way to try to prevent governments from using that currency issuance power in ways their citizens would prefer they did not.
Even if you don't agree with the politics it is a pretty interesting technology for consensus building between potentially adverse participants. Someone with experience maintaining open source repos could at least appreciate that aspect.
You're free to shit on cryptocurrency all you like, but it has many use-cases where traditional banks and payment systems fall short.
Without cryptocurrencies like Monero we wouldn't have anonymous VPN services like Mullvad, and we would have a global web being forced to follow US laws despite being based elsewhere.
For example, Visa is forcing art platforms to ban (legal) adult content or face blocking. The alternative is master card and other cards that you can't get in many parts of the world, and there is no guarantee that those cards also won't start enforcing restrictions. For those places, cryptocurrency is easiest, cheapest and fastest.
Also, a ponzi scheme is something where you pay investors with newer investors' money. This is not how cryptocurrency works. People pay a tiny amount per transaction to stakers or miners that keep the network going. Anything else is purely a result of the giant surge of new investors, and once we hit a period of stability, mining and staking will be virtually the only way to "earn" money from cryptocurrency and that is completely fair seeing as you're paid to keep the network going.
Ethereum Layer 2 is cheaper than credit card transactions, by the way.
And the biggest vehicle for scams is google and Amazon gift cards.
Torvalds also dismissed the idea of technological singularity as a bedtime story for children, saying continuous exponential growth does not make sense.
No one in the cryptospace claims this.
I guess we should all get rid of our bitcoin that's worth hundreds of times more than when we bought it, because an operating system kernel developer doesn't like it.
Linus is awesome but he's not a god, his opinion of things outside the Linux kernel is just the opinion of a guy. Stop worshipping him, he doesn't even like it.